Is It a Good Idea to Subdivide Your Property?

If you're lucky enough to own a sizeable plot of land, of which most of the surface is still undeveloped, you may be thinking about your options. You may need to raise some capital or want another revenue stream and are considering some development. In certain circumstances, you may be able to subdivide your land so that you can build an additional property or two and either rent or sell it outright to a third party. What do you need to consider before you move ahead with land subdivisions?

The Demand

Much will depend on your geographical location when you're trying to figure out how much money you can make. Certainly, if you live within a heavily developed town or community, then it is likely that there is a demand for additional housing stock.

The Plan

How is your land configured and, specifically, where is it positioned? If you have a corner lot with a street on two or more sides, then you are in a preferable position as you can theoretically develop another property that has its own access to the street. You need to ensure that you will have a sufficient amount of space to build a property that is practical and to give the new owner or tenant a certain amount of outdoor space and privacy. It's not good enough to squeeze as many properties into as small a space as you can to try and maximise your efforts, as you may not be able to sell or lease them if you go overboard.

The Utilities

You also need to ensure that you have relatively easy access to utilities. If these all feed into your property from a neighbour's land, then you may need to negotiate with them to get access and they may require some type of compensation themselves. Factor this into the cost quoted to you by the utility companies to create new connections.

The Market

Have a good look at the market around you to see what is selling and what seems to be in demand. If you can build properties that are favoured at the moment, then you're likely to get a return on your investment sooner rather than later.

As always, do a lot of research before you even begin. Find out if the local authority zoning permits are favourable and make sure that you calculate your costs to take into account any unforeseen charges or taxation.

This can be a complicated area to understand, so it may be a good idea to bring in a consultant who specialises in subdivision development to help you.